Tesla Shares Fall On Missed Production Estimates

Tesla Motors Inc. (NASDAQ:TSLA) missed forecasts for fourth-quarter deliveries, sending its shares lower in pre-market trading. The Palo Alto, California-based company delivered about 22,200 vehicles in the final three months of last year, less than the forecasted 25,000 units. The results brought its full-year tally to 76,230 vehicles, lower than its forecast for about 80,000 units.

Chief Executive Officer Elon Musk has a bad habit of setting ambitious targets and timelines and coming up short. Nearly every quarter, the company finds itself explaining why it didn’t quite do what it hoped. The Model S and Model X were both significantly delayed on release and slow to reach volume production. Tesla also missed its first-quarter deliveries and second-quarter deliveries forecasts last year.

Tesla fell about 2 percent to $212.60 as of 7:26 a.m. in New York before the start of regular trading. The shares dropped roughly 11 percent last year. It was the company’s first annual decline since its initial public offering in June 2010.

Production delays continue to plague the carmaker. According to Tesla, short-term production issues related to new hardware for the Autopilot driver-assistance system contributed to delivery delays for nearly 3,000 vehicles. The Autopilot-related issues began in late October and wasn’t resolved until early December.

Following last year’s merger of the carmaker with solar-panel installer SolarCity Corp., the pressure has increased on Tesla to make good on its goals. Tesla completed its acquisition of SolarCity in November, taking on the solar installer’s $2.89 billion debt load. Both companies have typically burned cash and reported losses.

The 76,230 vehicles Tesla delivered in 2016 was a record, up 51 percent from a year earlier. In the fourth quarter of 2016, the deliveries were split with 60 percent going to the Model S and Model X. Tesla also reported a profit for the three months ended in September, its first in eight quarters.

Tesla has set a goal of making 500,000 autos annually in 2018, nearly six times the number of cars and SUVs it produced last year. The ambitious production goals depend in part on its battery factory east of Reno, Nevada, called the Gigafactory. That factory is slated to open later this year.

Tesla’s new Model 3 is planned for volume production in late 2017. Tesla received more than 300,000 reservations when the $35,000-base-priced Model 3 sedan went on sale last March. Tesla has no experience building at the volumes it anticipates for Model 3, even though the lower-cost sedan is said to be simplified in critical ways for easier assembly. Investors and purchasers alike are hoping that this production goal, Tesla meets.